Topic 13 - Secured & Unsecured Lending Flashcards Preview

No:1 > Topic 13 - Secured & Unsecured Lending > Flashcards

Flashcards in Topic 13 - Secured & Unsecured Lending Deck (20)
Loading flashcards...
1
Q

Secured lending

A

Borrower gives lender the right to take possession of asset if borrower fails to repay loan.

2
Q

Unsecured loan

A

The lender has nothing if borrower can’t pay loan back. Interest rates are usually higher though

3
Q

What is a Mortgagor

A

A borrower who transfers their property to lender for the duration of loan

4
Q

What is a mortgagee

A

The lender

5
Q

Covenants

A

It’s a promise from the borrower that they will maintain property to a good condition

6
Q

Pension mortgages

A

If you have a personal pension or stakeholders pension. It can be used as a repayment tool for a mortgage as you can release 25% tax free lump sum

7
Q

Personal pension

A

Set up by the individual and benefits are based on individuals investments

8
Q

Stakeholder pension

A

Low cost pension product that meets government standards on charges and contributions

9
Q

ISA mortgages

A

ISA managers calculate the amount of regular monthly repayments are needed to pay off the rest using lump sum

10
Q

Flexible mortgages

A

Gives the borrower flexibility on monthly payments. Benefit if going through financial difficulties

11
Q

CAT-standard mortgages

A

(Charges, access and terms) are added to mortgage products.

Suits borrowers who want clear limits on charges.

12
Q

Mortgage indemnity guarantee

A

(MIG) is an insurance policy that protects lenders when they lend Hight LTV limits and the borrower defaults. The insurance makes up the shortfall.

13
Q

What is equity release

A

Releasing the market value of property over the loan secured against it. Existing mortgage would have to be paid off

14
Q

Lifetime mortgages

A
  • Lender will pay 55% of property value
  • Fixed rate because term is unknown
15
Q

How does home reversion plan work

A

When the homeowner sells a percentage of their property to a scheme provider.

16
Q

First charge

A

Legal right to have first call on a property if borrower defaults on loan

17
Q

Second charge

A

New lender takes second charge when Borrower offers property as a security for the second time.

Once property is sold original lender will claim loan back if any surplus, second lender charge will be met

18
Q

What is Bridging finance

A

Arranging a loan to finance new property before you have sold existing.

19
Q

Commercial loans

A

Loans to business to startup or expand

20
Q

What is Revolving credit

A

Customer can borrow more while repaying existing debt